Economy

The June deficit totaled $68.4 billion, the second highest June deficit on record, but down from the all-time high of $94.3 billion in June 2009, a month when the government was spending heavily to stabilize the financial system and jump-start economic growth.

June is normally a surplus month as the government collects tax payments from corporations and individuals who make quarterly payments. Only seven years in the past 56 have seen deficits in June.

A new study released by The Iowa Institute for Community Alliances shows the number of homeless in Iowa climbed 38.7 percent in just one year. The statistics mean that more than 23,000 Iowans have no place to call home. The study shows 14,000 of the homeless are families.

"They're just running out of patience," says J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based company that conducted the survey. "The number they're seeing change is the deficit. It's rising at what seems like an astronomical rate. The number that seems intractable is the unemployment rate."

California and New York helped push U.S. states’ tax revenue to the first quarterly gain since 2008, the Nelson A. Rockefeller Institute of Government said.

Overall tax receipts increased 2.5 percent to $164.5 billion during the January-to-March period, compared with the same three months in 2009, the Albany, New York-based institute said in a report today.

State auditors say Colorado needs to overhaul the way it funds unemployment benefits if it wants to avoid repeated shortfalls. The unemployment insurance trust has borrowed roughly $188 million dollars from the federal government after becoming insolvent in January. Lawmakers held a hearing on the audit yesterday.

A third of Spain's city councils are in dire straits and may be forced to suspend payments by the end of the year, replicating the woes in the US, where many states are bearing the brunt of fiscal tightening

The great majority of councils in Andalucia are already in deep crisis – either insolvent or muddling through from day to day. More than 400 of the 8,000 councils across the country have stopped paying electricity, water and telephone bills, according to Spanish newspaper El Economista.

Federal regulators should hold off on their enforcement blitz against the state’s banks because of the impact from BP PLC’s oil spill, according to a letter by Florida Bankers Association President Alex Sanchez....“Recently, I met and spoke with investment bankers in New York and elsewhere, who informed me that there is a definite chilling on raising capital for Florida banks in light of the BP oil spill,” Sanchez wrote.

The National Federation of Independent Business, the small-business lobbying group, announced Tuesday morning that its index of optimism among small business owners slid down in June. “Seventy percent of the decline this month resulted from deterioration in the outlook for business conditions and expected real sales gains. Owners have no confidence that economic policies will fix the economy,” NFIB said.

Damon Vickers, managing director at Nine Points Capital Partners, agrees with this concept, remarking that many Western countries are functionally insolvent. He believes that Western credit ratings agencies, by assigning them the highest ratings, are acting as 'enablers' and covering up the reality of functional insolvency, and thereby hampering the process of admitting this problem and working towards a solution.

Vickers added that he is not even convinced that Western countries are successfully paying their debt by borrowing. Instead, he said they are also to some extent inflating their way out of debt.

Speier's measure would have capped big firms' borrowing, called leverage, at a ratio of 15-to-1. Her leverage ratio would have restricted the amount of debt a company could take on. With her provision, a firm had $1 billion in publicly held stock, it could have debt -- or be leveraged -- up to $15 billion under the 15-to-1 limitation. However, instead, Senate and House lawmakers agreed to allow a newly formed Financial Stability Oversight Council to require that the Federal Reserve set up a 15-to-1 debt-to-equity limit on a firm only if it poses a "grave threat" to systemwide financial stability.

Agreeing that Prichard's pension system is a "classic pyramid scheme," the judge presiding over city's bankruptcy expressed worries today about whether it can pay its bills if it makes even the meager payments to retirees that it has proposed.... Williams, said the pension plan was unsustainable from the start and that the city simply has no ability to meet its obligations.

Millions of workers will suffer effective pay cuts and a fall in their standard of living for the next four years, an economist from the Treasury’s independent forecaster has warned.Geoff Dicks, one of the three members of the Office for Budget Responsibility (OBR), told MPs yesterday that the UK will experience “falling real wages” as pay rises fail to keep pace with inflation.

Environment

U.S. Coast Guard officials say test results have confirmed tar balls from the massive Gulf oil spill have been found on a second Texas beach. Chief Warrant Officer Lionel Bryant said Tuesday that tar balls found on a Galveston beach last week are from the ruptured BP-operated Deepwater Horizon oil well. Tar balls located July 5 on McFaddin Beach, a stretch of coast east of Bolivar Peninsula, were the first confirmation that crude from the massive BP oil spill had reached Texas shores.

The Gulf of Mexico oyster shortage continues to rear its head at restaurants all over New Orleans – and not just at those specializing in seafood. On Saturday night, our server at Besh Steak informed us before ordering that there were only a handful of remaining orders of oysters en brochette, one third of a Louisiana seafood “3 ways” appetizer. She feared those would be the last Gulf oysters the restaurant served for some time.

Mugabe: Diamonds can revive Zim economy -Zimbabwe President Robert Mugabe said on Tuesday his nation will sell its massive reserves of diamonds despite not receiving authorisation from the world's diamond control body. A defiant Mugabe told lawmakers that diamond sales have "huge potential" to revive the shattered economy. He said Zimbabwe can account for one-fourth of the world's diamond supply.

In other news today, the price of diamonds fell to just slightly above the price of tempered glass, as Zimbabwe flooded the market, breaking the Debeers lead diamond cartel that for years had propped the prices of diamonds in the stratosphere by controlling the supply with an iron fist. Some diamond merchants in New York, stuck with huge amounts of worthless stones, were reported attempting suicide by jumping out of their basement windows. Apparently diamonds ARE "forever", but the prices are not.

Millions face four-year fall in standard of living (UK) No surprise. However the article cites job numbers from previous downturns and with smoke and mirrors it attempts to say that the job losses this time are not as bad. Of course no mention of the £180bn the government pumped into the economy to save these 250,000 jobs. Using the figures quoted it works out at £720,000 per job.